Paychecks in Bitcoin: Fad or Trend?

Large Japanese-based company offers to pay employees in bitcoin

Allen Smith, J.D. By Allen Smith, J.D. February 23, 2018
LIKE SAVE

​Is bitcoin, a digital currency, becoming accepted as a form of compensation? Japanese web-business GMO Internet, which has 4,000 employees, has announced it will offer employees the chance to receive pay in this most popular of cryptocurrencies, reports the law firm of Fisher Phillips. Already some small tech businesses are doing the same. Might others follow suit?

We've gathered articles from SHRM Online and other trusted resources on bitcoin to examine whether this might be an emerging trend.

Bitcoin Has Its Skeptics

Some warn that bitcoin is too volatile to be relied upon. Its valuation has soared and dropped over the past few months and "a bitcoin crash could have serious global implications," cautioned Harold James, a professor of history and international affairs at Princeton University. "Financial institutions' current exposure to the cryptocurrency is unclear, and probably would not be fully revealed until after a financial disaster. It is eerily reminiscent of 2007 and 2008, when no one really knew where the exposure to subprime-mortgage debt ultimately lay." (Project Syndicate)

Pros and Cons of Paying Bitcoin

Paying in bitcoin has advantages though. It's easy to use—when a payment is made the payee gets it instantly. Administrative or processing fees are low as well. However, federal and state wage and hour laws may not permit employers to use bitcoin to pay employees' salaries. Compensation in bitcoin should be an optional benefit that employees may receive in addition to their standard U.S. dollar-based compensation. A further challenge is that the IRS considers bitcoin to be property, complicating payroll reporting, tax withholding, and capital gains and losses reporting. Third-party services can help ease the resulting administrative burden. (Fisher Phillips)

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

Bitcoin So Far Is Secure

Because bitcoin is a blockchain product it so far is secure, as blockchains have not yet been hacked. Blockchain is a decentralized database that stores a ledger of assets and transactions across a peer-to- network and uses its network to authenticate transactions. Transactions are secured and stored in blocks of data, which in turn are linked and secured. Once on a blockchain, data cannot be removed. It is nearly impossible to change any transaction information once it is validated and becomes part of a block. (Fisher Phillips and Forbes)

International Payments

Global payments through bitcoin may be particularly advantageous, as international payroll can be costly and delayed because of the numerous intermediary banks and third parties involved in the process. Bitwage, based in San Francisco, is one company that already uses technology to facilitate cross-border payments through the use of bitcoin. Australian company Chronobank also uses blockchain-type technology to pay workers without going through banks. (SHRM Online)

Unions Operated Based on Blockchain

Blockchain technology will have uses other than being the building blocks for such cryptocurrencies as bitcoin, experts predict. For example, in the future there may be unions that are organized and operated based on blockchain. With blockchain, every worker could be given a secure and anonymous right to vote on issues relating to the workforce. As issues arise, each member would cast a digital vote that would be recorded without revealing the name of the voter, using such technology as zk-SNARKs, which is being used by the cryptocurrency Zcash. (The Weekly Standard)

 

Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. Join/Renew Now and let SHRM help you work smarter.

LIKE SAVE

Job Finder

Find an HR Job Near You
Search Jobs
Post a Job

SPONSOR OFFERS

Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect
temp_image